3.2.    Pending litigations

The Company's pending litigation comprises of claims against the Company primarily by the customers and proceedings pending with Tax authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed the contingent liabilities where applicable, in its standalone financial statements. The Company does not expect the outcome of these proceedings to have a material adverse effect on its financial statements at March 31, 2025. Refer note 3.1 for details on contingent liabilities.

In respect of litigations, where the management assessment of a financial outflow is probable, the Company has made a provision of ' 14,739 lakhs at March 31, 2025 (March 31, 2024: ' 12,186 lakhs).

3.3.    Actuarial method and assumptions

The actuarial liability in respect of both participating and non-participating policies is calculated using the gross premium method, using assumptions for interest, mortality, morbidity, persistency, expense and inflation and, in the case of participating policies, future bonuses together with allowance for taxation and allocation of profits to shareholders. These assumptions are determined as prudent estimates at the date of valuation including allowances for possible adverse deviations.

The liability for the unexpired portion of the risk for the non-unit liabilities of linked business and attached riders is the higher of the liability calculated using discounted cash flows and the unearned premium reserve.

f)    Per policy renewal expenses are assumed to inflate at 4.88% per annum. The expense inflation assumption used at March 31, 2024 was 4.91%

g)    The bonus rates for participating business to be declared in the future is consistent with the valuation assumptions.

h) The tax rate applicable for valuation at March 31, 2025 is 14.56% per annum. The tax rate applicable for valuation at March 31, 2024 was 14.56% per annum.

Certain explicit additional provisions are made, which include the following:

a)    Reserves for additional expenses that the Company may have to incur if it were to close new business twelve months after the valuation date.

b)    Reserves for guarantees available to individual and group insurance policies.

c)    Reserves for cost of non-negative claw back additions.

d)    If a policy which is in force as at the valuation date is subsequently cancelled in the free-look period, then there could be a strain. An expected free look cancellation rate is applied to the reserve for policies issued within a period of two months preceding the valuation date. The reserve is calculated as the strain (subject to a floor of zero) that would arise if the policies were to exercise the free look option, multiplied with a prudent estimate of the free look cancellation rate. Reserves for free look option given to policyholders are '13 lakhs as on March 31, 2025. The free look reserves as on March 31, 2024 were '26 lakhs .

e)    Reserves for lapsed policies eligible for revivals.

f)    An additional reserve is held for incurred but not reported claims.

3.4. Funds for Future Appropriations (‘FFA’)

The balance of funds for future appropriations related to participating line of business, amounting to ' 126,831 (March 31,2024: ' 128,658 lakhs) represents funds, the allocation of which, either to Participating Policyholders or to Shareholders, has not been determined at the Balance Sheet date. Transfers to and from the fund reflect the excess or deficit of income over expenses and appropriations in each accounting period arising in the Company's Policyholders' fund. Any allocation to

the policyholder would also give rise to a shareholder transfer in the required proportion.

Further, as per the IRDAI Master Circular on Actuarial, Finance and Investment Functions of Insurers, IRDAI/ ACTL/CIR/MISC/80/05/2024 dated May 17,    2024,

discontinuance charges amounting to ' 1,487 lakhs arising from policies discontinued after April 1, 2024 and that have not exited from the books by March 31, 2025 have been transferred to the funds for future appropriation of linked line of business and shown in the Balance Sheet.

3.5.    Claims settled and remaining unpaid

Claims settled and remaining unpaid for a period of more than six months at March 31, 2025 is ' 1,046 lakhs (March 31, 2024: ' 687 lakhs). These claims remain unpaid awaiting receipt of duly executed discharge documents from the claimants or litigation pending.

3.6.    Reconciliation of unclaimed amounts of policyholders

The unclaimed amount of policyholders is governed by the Master Circular on Operations and Allied Matters of Insurers, 2024 - IRDAI/PPGR/CIR/MISC/97/06/2024 dated June 19, 2024 and Investment Regulations, 2016 as amended from time to time. The Company maintains a single segregated fund to manage all unclaimed amounts.

The unclaimed amount of policyholders liability has been disclosed under “Current Liabilities” in schedule 13. The amount in the unclaimed fund has been disclosed in schedule 12 as “Assets held for unclaimed amount of policyholders”. Investment income accruing to the unclaimed fund has been credited to the fund and disclosed as “Other Income” under Linked Life segment in the Revenue Account. Such investment income net of fund management charges (‘FMC') is paid/ accrued as “interest on unclaimed amounts” in schedule 4 of the standalone financial statements as “Benefits paid”.

The IRDAI, vide its email dated August 27, 2024 had directed the Company to exclude unpaid amounts arising from maturities, foreclosures, survival benefits, cancellations (excluding freelook cancellations), pension and annuity payments, and refunds of excess premiums or deposits from being classified as unclaimed amounts. Further, amounts outstanding in respect of foreclosure of linked policies shall be reinstated back to the discontinuance fund.

The amount remaining in unclaimed fund as on March 31, 2025, pertains to amounts under litigation or subject to statutory holds.

3.10. Operating lease commitments

The Company takes premises, motor vehicles, office equipments and servers on operating lease. Certain lease arrangements provide for cancellation by either party and also contain a clause for renewal of the lease agreement. Lease payments on cancellable and non-cancellable operating lease arrangements are charged to the Revenue account and the Profit and Loss account over the lease term on a straight line basis. The total operating lease rentals charged for the year ended March 31, 2025 is ' 11,053 lakhs (March 31, 2024: ' 8,062 lakhs).

3.11. Assets given on operating lease

The Company has entered into an agreement in the nature of leave and license for leasing out the investment property. This is in the nature of operating lease and lease arrangement contains provisions for renewal. There are no restrictions imposed by lease arrangement and the rent is not determined based on any contingency. The total lease payments received in respect of such lease recognised in the Revenue account and the Profit and Loss account for the year ended March 31, 2025 is ' 5,260 lakhs (March 31, 2024: ' 4,581 lakhs).

3.15.    Fund Balance Sheet at March 31, 2025

Fund Balance Sheet for each segregated linked fund is annexed herewith - Refer Annexure 1.

3.16.    Fund Revenue Account for the year ended March 31, 2025

Fund Revenue Account for each segregated linked fund is annexed herewith - Refer Annexure 2.

3.17.    Annexure to the Revenue account and Additional ULIP Disclosures

As required by Master Circular IRDAI/ACTL/CIR/MISC/80/05/2024 dated May 17^th, 2024, annexure to the Revenue account is given in annexure 3 and additional ULIP disclosures are published on Company website.

(b) Defined benefit plans (i) Gratuity

General description of defined benefit plan

This is a funded defined benefit plan for qualifying employees under which the Company contributes to the ICICI Prudential Life Insurance Company Limited Employees' Group Gratuity Cum Life Assurance Scheme. The plan provides for a lump sum payment as determined in the manner specified under the Payment of Gratuity Act, 1972 or the Company's gratuity scheme, whichever is higher, to the vested employees. The benefit vests after a minimum prescribed period of continuous service at retirement or on death while in employment or on termination of employment. Defined benefit obligations are actuarially determined at each quarterly Balance Sheet date using the projected unit credit method as required under Accounting Standard (AS) 15 (Revised), “Employee benefits”. Actuarial gains or losses are recognised in the Revenue Account/ Profit and Loss Account.

(ii) Provident fund

Provident fund benefits are aimed at providing security to staff members and their dependents on retirement, disability or death. Both employee and the Company contribute an equal percentage of the basic salary, a part of which is towards Government administered pension fund and balance portion is contributed to the fund administered by trustees. The Provident fund is managed by ICICI Prudential Life Insurance Company Employees' Provident Fund Trust.

The minimum rate at which the annual interest is payable by the Trust to members is prescribed by the Government. The Company has an obligation to make good the shortfall, if any, between the Government prescribed rate and actual return earned by the Provident fund.

(ii) Compensated absence:

This is an unfunded employee benefit. The amount recognised as an expense during the year ended March 31, 2025 is ' 1,908 lakhs ( March 31, 2024 is ' 1,836 lakhs).

Liability for compensated absence for employees is determined based on actuarial valuation which has been carried out using the projected accrued benefit method which is same as the projected unit credit method in respect of past service. The assumptions used for valuation are:

While computing liability, 2% leave availment has been assumed for each subsequent year following the valuation date and any voluntary leave encashment at a future date is assumed to be Nil.

3.19.Employee Stock Option Scheme (ESOS) and Employee Stock Unit Scheme (ESU)

Employee Stock Option Scheme (ESOS)

The Company granted options to its employees under its Employees Stock Option Scheme, prior to listing, since approval of its Employees Stock Option Scheme - 2005. This pre-IPO scheme shall be referred to as ‘ESOS 2005' or ‘scheme'. The scheme had six tranches namely Founder, 2004-05, 2005-06, 2006-07, Founder II and 2007-08, pursuant to which shares had been allotted and listed in accordance with the in-principle approval extended by the stock exchanges. All six tranches under the pre-IPO scheme stand lapsed as on March 31, 2025. The scheme had been instituted vide approval of its Members at the Extra-Ordinary General Meeting (EGM) dated March 28, 2005 and had been subsequently amended by the Members of the Company vide its EGM dated February 24, 2015.

The scheme was ratified and amended by the members of the Company at its Annual General Meeting held on July 17, 2017 which is in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014 (referred to as the ‘revised scheme').

The meeting of Board Nomination and Remuneration Committee (BNRC) and the Board held on April 24, 2019 had approved the amendment to the definition of “exercise period”. The revision to the definition was approved by the members of the Company at its Annual General Meeting held on July 17, 2019.

Further, the meeting of BNRC and the Board held on April 17, 2021 and April 19, 2021 respectively had approved the increase in the limit of the number of shares issued or issuable since March 31, 2016 pursuant to the exercise of any options granted to the eligible employees issued pursuant to the revised scheme or any other stock option scheme of the Company, by 0.90% of the number of shares issued as on March 31, 2016, i.e. from a limit of 2.64% of the number of shares issued as on March 31, 2016 to 3.54%. The revision to the limit was approved by the members of the Company at its Annual General Meeting held on June 25, 2021.

As per the revised scheme, the aggregate number of shares issued or issuable since March 31, 2016 pursuant to the exercise of any options granted to the eligible employees issued pursuant to the scheme or any other stock option scheme of the Company, shall not exceed 3.54% of the number of shares issued at March 31, 2016. Further, pursuant to the revised scheme the maximum number of options that can be granted to any eligible employee in a financial year shall not exceed 0.1% of the issued shares of the Company at the time of grant of options. The revised scheme provides for a minimum period of one year between the grant of options and vesting of options. The exercise price shall be determined by the BNRC in concurrence with the Board of Directors of the Company on the date the options are granted and shall be reflected in the award confirmation. Shares are allotted/issued to all those who have exercised their options, as granted by the Board of the Company and/or the BNRC in accordance with the criteria ascertained pursuant to the Company's compensation policy.

The Company granted options in eighteen more tranches under ESOS 2005 (Revised), namely 2017-18, 2018-19, 2018-19 special options, 2018-19 joining options, 2019-20, 2019-20 joining options, 2020-21, two tranches of 202021 joining options, 2021-22 three tranches of 2021-22 joining options, 2022-23, 2022-23 joining options, 2023-24, 2023-24 joining options, 2024-25 .

The weighted average price of options exercised during the year ended March 31, 2025 is ' 405.14 (March 31, 2024: ' 394.28).

Out of the total outstanding options at April 1, 2024, 5,331,719 options vested during the year ended March 31, 2025 and ' 18,844 Lakhs was realised by exercise of options during the year ended March 31, 2025. Amount realized by exercise of options does not include options exercised by employees during the financial year where payments are received after March 31, 2024.

The Company follows intrinsic value method. During the year ended March 31, 2025, the Company has recognised a compensation cost of ' Nil ( March 31, 2024: ' Nil) as the intrinsic value of the unit.

Employee Stock Option Unit (ESU)

The Board Nomination and Remuneration Committee (BNRC) at its meeting held on June 10, 2023, approved the ‘ICICI Prudential Employees Stock Unit Scheme - 2023' (Unit Scheme), designed in accordance with SEBI Regulations and other applicable regulations. Subsequent to the approval of the Unit Scheme by the Board at its meeting held on June 10, 2023 it was approved by the shareholders of the Company at its meeting held on July 28, 2023.

The Maximum number of Shares that can be issued under this Unit Scheme shall be 1,45,00,000 (one crore forty five lacs). Each Unit on Exercise will entitle the participant to 1 (One) share. The Grants under the Unit Scheme shall be made in one or more tranches as may be determined by the Committee over a period of 6 (six) years from the date of approval of the Unit Scheme by the shareholders. The maximum number of Units granted to any Eligible Employee shall not exceed 60,000 (sixty thousand) Units in any financial year.

The Vesting shall commence on the expiry of minimum period of one (1) year from the date of Grant of the Units and the Vesting Period would be spread over a minimum period of three (3) years from the date of Grant of the Units. The Committee has the authority to prescribe the Exercise Period not exceeding 5 years from date of vesting within which the Participant can Exercise the vested Units and that would lapse on failure to Exercise the same within the Exercise Period. The Exercise Price shall be the face value of the Shares of the Company.

No units exercised during the year ended March 31, 2025.

Out of the total outstanding units on April 23, 2024, 3,160 units were vested during the year ended March 31, 2025, and ' Nil was realized for exercise of units during the year ended March 31, 2025.

The Company follows intrinsic value method. During the year ended March 31, 2025 the Company has recognized a compensation cost of ' 5,008 lakhs( March 31, 2024: ' Nil) as the intrinsic value of the unit exercised.

Had the Company followed fair value method based on Black Scholes model valuing its options and units compensation cost for the year ended would have been higher by ' 4,467 lakhs (March 31, 2024: ' 8,455 lakhs) in case of ESOS and ' 7 lakhs in case of ESU and the proforma profit after tax would have been ' 114,433 lakhs (March 31, 2024: ' 76,784 lakhs). On a proforma basis, the company's basic and diluted earnings per share would have been ' 7.93 for the year ended March 31, 2025 (March 31, 2024: ' 5.33) and ' 7.87 for the year ended March 31, 2025 (March 31, 2024: ' 5.31) respectively.

3.20. Foreign exchange gain/loss

Transactions in foreign currencies are recorded at exchange rate prevailing on the date of transaction. The exchange difference between the rate prevailing on the date of transaction and on the date of settlement is recognised as income or expense, as the case may be. The net foreign exchange fluctuation loss debited to the Revenue account and the Profit and Loss account for the year ended March 31, 2025 is ' 65 lakhs (March 31, 2024: ' 97 lakhs).

3.22. Managerial Remuneration

The appointment of managerial personnel is in accordance with the requirements of Section 34A of the Insurance Act, 1938. IRDAI has issued guidelines on June 30, 2023 on remuneration of Non-Executive Directors and Managing Director (‘MD') /Chief Executive Officer (‘CEO') /Whole Time Directors (‘WTD') and Master Circular on Corporate Governance for Insurers, 2024 issued vide reference no. IRDAI/F&I/CIR/MISC/82/5/2024 dated May 22, 2024, which have prescribed certain qualitative and quantitative disclosures. The disclosures for year ended March 31, 2025, are given below:

Remuneration to MD/CEO/WTD:

Qualitative disclosures:

A) Information relating to the bodies that oversee remuneration.

Name, composition and mandate of the main body overseeing remuneration:

The Board Nomination and Remuneration Committee (BNRC/Committee) is the body which oversees aspects pertaining to remuneration. The functions of the Committee include identifying persons who are qualified to become Directors and who may be appointed in senior management in accordance with the criteria laid down and recommending to the Board their appointment & removal and formulating a criteria and specifying the manner for effective evaluation of every individual

director's performance, evaluation of the performance of the Board and its Committees, and reviewing its implementation and compliance; considering to extend or continue the term of appointment of the Independent Directors, on the basis of the report of performance evaluation of Independent Directors; determining and recommending to the Board a policy relating to the remuneration for the Directors, the CEO, key management persons and other employees in alignment with applicable guidelines and framework; recommending to the Board all remuneration, in whatever form, payable to senior management; ensuring that the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors of the quality required to run the Company successfully; ensuring that the relationship of remuneration to performance is clear and meets appropriate performance benchmarks; approving the compensation program and ensuring that remuneration to Directors, key management persons and senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the Company and its goals; formulating the criteria for determining qualifications, positive attributes and independence of a Director; devising a policy on diversity of the Board; considering and approving employee stock option schemes and administering & supervising the

same; ensuring that the proposed appointments/re-appointments of key management persons or Directors are in conformity with the Board approved policy on retirement/superannuation; scrutinising the declarations of intending applicants before the appointment/re-appointment/election of Directors by the shareholders at the annual general meeting; and scrutinising the applications and details submitted by the aspirants for appointment as the key management person and to make independent/ discreet references, where necessary, well in time to verify the accuracy of the information furnished by the applicant.

External consultants whose advice has been sought, the body by which they were commissioned and in what areas of the remuneration process:

The Company employed the services of reputed consulting firms for market benchmarking in the area of compensation.

Scope of the Company’s remuneration policy (e.g. by regions, business lines), including the extent to which it is applicable to foreign subsidiaries and branches:

The Company's Policy on Compensation & Benefits (“Compensation Policy”) for Managing Director & CEO, other Wholetime Directors, non-executive Directors, Key Management Person (KMP), Senior Management Personnel (SMP) and other employees was last amended and approved by the BNRC at its Meeting held on April 23, 2024 and July 22, 2024 respectively and the Board at its Meeting held on April 23, 2024, and July 23, 2024 respectively.

Type of employees covered and number of such employees:

All employees of the Company are governed by the Compensation Policy. The total number of permanent employees governed by the Compensation Policy of the Company at March 31, 2025 was 20,035.

B) Information relating to the design and structure of remuneration process.

Key features and objectives of remuneration policy:

The Company has historically followed prudent compensation practices under the guidance of the Board and the BNRC. The Company's approach to compensation is based on the ethos of meritocracy and fairness within the framework of prudent risk management. This approach has been incorporated in the Compensation Policy, the key elements of which are given below:

Effective governance of compensation:

The Company follows prudent compensation practices under the guidance of the BNRC and the Board. The BNRC has the oversight for framing, review and implementation of the Company's Compensation Policy on behalf of the Board, and shall work in close coordination with the Board Risk Management Committee for an integrated

approach to the formulation of the Compensation Policy where required .The decision relating to the remuneration of the Managing Director and CEO (MD & CEO), other wholetime Directors and KMPs/SMPs is reviewed and approved by the BNRC and the Board. The BNRC and the Board approves the Key Performance Indicators (KPIs) and the performance threshold for payment of performance bonus, if applicable. The BNRC assesses business performance against the KPIs and on various risk parameters as prescribed by IRDAI. Based on its assessment, it makes recommendations to the Board regarding compensation for MD & CEO and other wholetime Directors, performance bonus and longterm pay for all eligible employees, including senior management and key management persons.

Alignment of compensation philosophy with prudent risk taking:

The Company seeks to achieve a prudent mix of fixed and performance-linked variable pay, with a higher proportion of variable pay at senior levels. For the MD & CEO and other wholetime Directors and KMPs/SMPs, compensation is sought to be aligned to the pre-defined performance objectives of the Company. In addition, the Company has an Employees Stock Option Scheme and an Employee Stock Unit Scheme aimed at enabling employees to participate in the long-term growth and financial success of the Company through stock option grants/stock unit grants that vest over a period of time.

Whether the Remuneration Committee reviewed the firm’s remuneration policy during the past year, and if so, an overview of any changes that were made:

The BNRC reviewed the Company's Compensation Policy at its meetings held on April 23, 2024 and July 22, 2024 respectively.

•    Insurance Regulatory and Development Authority of India (IRDAI) had released 'Master Circular on Corporate Governance for Insurers, 2024 on May 22, 2024 with the objective of promoting the alignment of remuneration policies with the long-term interest of insurers to avoid excessive risk taking, thereby promoting sound overall governance of insurers and fair treatment of customers. These guidelines are applicable for remuneration payable to wholetime Directors (WTDs), Key Management Persons (KMPs) and Senior Management Persons (SMPs) of private insurers from Financial Year 2024-25.

•    Subsequently, the Compensation Policy was amended, and accordingly the amendments were proposed to the Committee, in line with the Master Circular on Corporate Governance for Insurers, 2024. The key changes involved including a clause on deferment of cash component of performance bonus/PLR for all other employees, a clause on maximum cap on performance-linked variable pay and long-term pay

together of 300% for all employees, and a clause on hedging to disallow hedging of compensation including ESOPs/ESUs for WTDs & KMP/SMP and all other employees. Additionally, Embedded Value and Value of New Business were added as parameters to the minimum parameters to be followed to determine performance assessment of WTDs, KMPs and SMPs. Consequent to the introduction of deferral of variable pay for all other employees, the section on Claw-back was extended to also include Malus.

The revised compensation policy was approved by the BNRC at its meetings held on April 23, 2024 and July 22, 2024 and the Board at its meetings held on April 23, 2024 and July 23, 2024 respectively.

Description of the ways in which current and future

risks are taken into account in the remuneration

processes.

•    The Company follows prudent compensation practices under the guidance of the Board and the Board Nominations & Remuneration Committee (BNRC). The Company's approach to compensation is based on the ethos of meritocracy and fairness within the framework of prudent risk management. The performance rating assigned to employees is based on an assessment of performance delivered against a set of defined performance objectives. These objectives are balanced in nature and comprise a holistic mix of financial, customer, people, process, quality, compliance objectives and/or any other parameters as may be deemed fit

•    For the MD & CEO, other wholetime Directors and KMPs/SMPs, compensation is sought to be aligned to pre-defined performance objectives of the Company which are approved by the BNRC and the Board.

•    For the MD & CEO, other wholetime Directors and KMPs/SMPs, the quantum of variable pay does not exceed 300% as stipulated in the Compensation Policy) of total fixed pay in a year; a minimum of 50% of the variable pay (as stipulated in the Compensation Policy) will be under deferment. If the bonus amount is under ' 25 lacs, the deferment shall not be applicable. The deferral period would be spread over a minimum period of three years (deferment period). The frequency of vesting will be on annual basis and the first vesting shall not be before one year from the commencement of deferral period. The vesting shall be no faster than a pro rata basis. Additionally, vesting will not be more frequent than on a yearly basis.

•    Ensuring balance in setting performance objectives, capping the payout of performance bonus and following an annual payout cycle for variable pay ensures that prudent behaviour is suitably encouraged and rewarded.

•    The deferred part of the variable pay (performance bonus and long term pay in the form of stock options/ stock units) for wholetime Directors and KMPs/SMPs is subject to malus, under which, the Company will prevent vesting of all or part of the variable pay in the event of act of willful or gross misconduct or neglect, the commission of felony, fraud, misappropriation, embezzlement, breach of trust or an offence involving moral turpitude or breach of integrity, gross or willful insubordination, or materially inaccurate financial statements due to the result of misconduct including fraud, or poor compliance in respect of corporate governance and regulatory matters, or any other act detrimental to the interest of the Company. The details of malus and clawback arrangements are defined in the Company's Compensation Policy. In addition, under the events mentioned above and defined in the Compensation Policy, as per clawback arrangements with wholetime Directors and KMPs/SMPs, the employee agrees to return, in case asked for, the previously paid variable pay to the Company.

•    Due process including inquiries or investigations as required and/or adherence to principles of natural justice are ensured prior to conclusion on the above events of breaches and which would form the basis of decisions. Errors of judgment shall not be construed to be breaches.

Description of the ways in which the Company seeks to link performance during a performance measurement period with levels of remuneration.

The Company's approach to compensation is based on the ethos of meritocracy and fairness within the framework of prudent risk management. The extent of variable pay for individual employees is linked to individual performance for sales frontline employees and to individual & organisation performance for non-sales frontline employees & employees in the management cadre. For the latter, the performance rating assigned is based on assessment of performance delivered against a set of defined performance objectives. These objectives are balanced in nature, and comprise a holistic mix of financial, customer, people, process, quality and compliance objectives and/or any other parameters as may be deemed fit. For the MD & CEO, other wholetime Directors and KMPs/SMPs to ensure effective alignment of compensation with prudent risk parameters, the Company takes into account certain minimum parameters (as defined in the Compensation Policy and in line with the IRDAI Master Circular) to determine the performance assessment along with any other predefined performance objectives of the Company as may be determined by the BNRC and the Board.

In accordance with the IRDAI circular IRDAI/F&I/CIR/MISC/82/5/2024 dated May 22, 2024 read with IRDAI/F&A/GDL/ MISC/141/6/2023 dated June 30, 2023, annual managerial remuneration in excess of ' 400 lakhs per key managerial person required to be borne by the Shareholders' and separately disclosed in the Revenue account and Profit and Loss account. Accordingly, managerial remuneration in excess of such specified limit amounting to ' 411 lakhs has been contributed by the shareholders and separately disclosed in the Revenue account and Profit and Loss account for the year ended March 31, 2025 (March 31, 2024: ' 958 lakhs).

3.24. Borrowings

During the FY2025, the Company has issued unsecured, rated, listed, subordinated, redeemable, fully-paid, noncumulative, non-convertible debentures (NCDs) in the nature of ‘Subordinated Debt' in accordance with the IRDAI (Registration, Capital Structure, Transfer of Shares and Amalgamation of Insurers) Regulations, 2024 aggregating to ' 140,000 lakhs at a coupon rate of 8.03% per annum. The said NCDs were allotted on December 19, 2024 and are redeemable at the end of 10 years from the date of allotment with a call option with the Company to redeem the NCD post the completion of 5 years from the date of allotment and every year thereafter.

3.25.    Investments

The investments are made from the respective funds of the Policyholder's or Shareholder's and investment income thereon has been accounted accordingly. All investments are performing investments.

3.26.    Interest rate derivatives

In line with the requirement of IRDAI Master Circular on Actuarial, Finance and Investment Functions of Insurers, the Company has put in place a derivative policy approved by the Board. The policy covers various aspects substantiating the hedge strategy to mitigate the interest rate risk, thereby managing the volatility of returns from future fixed income investments due to variations in market interest rates.

A) The Company has during the period, as part of its hedging strategy, entered into Forward Rate Agreements (FRA) transactions to hedge the interest rate sensitivity for highly probable forecasted transactions as permitted by the IRDAI Master Circular on Actuarial, Finance and Investment Functions of Insurers. The FRA derivative contracts are over-the-counter (OTC) transactions, where the Company agrees to buy the notional value of a debt security at a specified future date, at a price determined at the time of the contract with an objective to lock in the price of an interest bearing security at a future date.

B) The portion of the fair value gain/loss on the interest rate derivative that is determined to be an effective hedge is recognised directly in ‘Credit/ (Debit) Fair Value Change Account’ in the Balance Sheet under policyholders' funds and the portion that gets determined as ineffective hedge or ineffective portion of effective hedge, based on the hedge effectiveness assessment is recognized in the Revenue Account under head “Transfer/Gain on revaluation/Change in fair value.

D)    A net amount of ' 2,150 lakhs for the year ended March 31, 2025 (March 31, 2024: ' 1,327 lakhs) was recognised in Revenue Account being the portion of loss determined to be ineffective portion of the effective hedge. The amount that was removed from the cash flow hedge reserve account during the year ended March 31, 2025 in respect of forecast transaction for which hedge accounting had previously been used but is no longer expected to occur is ' Nil (March 31, 2024: ' Nil). The hedged forecast transactions are expected to occur over the outstanding tenor of underlying policy liabilities and corresponding hedging gain/loss will accordingly flow to the Revenue Account.

E)    Disclosures on risk exposure in Interest rate derivatives:

i.    Interest rate derivative hedging instruments: Derivatives are financial instruments whose characteristics are derived from the underlying assets, or from interest and exchange rates or indices. Interest rate derivatives include forward rate agreements, interest rate swaps and interest rate futures. The Company during the financial year has entered into forward rate agreement (FRA) derivative instrument to hedge exposure due to interest rate sensitivity for highly probable forecasted transactions. These hedges were entered only for hedging purpose to hedge the interest rate risk. This hedge is carried in accordance with its established policies, strategy, objective and applicable regulations.

ii.    Derivative policy, process and hedge effectiveness assessment: The Company has a well-defined Board approved derivative policy and standard operating procedures setting out the strategic objectives, regulatory and operational framework and risks associated with interest rate derivatives. The policy includes the risk measurement and monitoring, processes to be followed and controls thereon. The accounting treatment has been documented and ensures a process of periodic effectiveness assessment and accounting in accordance with applicable accounting standard issued by the Institute of Chartered Accountants of India (ICAI).

The Company has clearly defined roles and responsibilities to ensure independence and accountability through the investment decision, trade execution, to settlement, accounting and periodic reporting and audit of the Interest rate derivative exposures. The overall policy, risk management framework for the Interest rate derivatives are monitored by the Board Risk Management Committee.

iii.    Scope and nature of risk identification, risk measurement, and risk monitoring: The derivative policy as approved by the Board identify risk associated with interest rate derivatives transactions and sets appropriate market risk limits such as stress testing and value-at-risk limits. Financial risks of the derivative portfolio are measured and monitored on periodic basis.

F)    Risk exposure in Forward Rate Agreement

A hedge is deemed effective, if it has a high statistical correlation between the change in value of the hedged item and the hedging instrument (FRA). Gains or losses arising from hedge ineffectiveness, if any, are recognized in the Revenue Account. The tenor of the hedging instrument may be less than or equal to the tenor of underlying hedged transaction.

The exposure limit has been calculated on the basis of Credit Equivalent Amount using the Current Exposure Method (CEM) as detailed below:

The Credit Equivalent Amount of a market related off-balance sheet transaction calculated using the CEM is the sum of

a)    The current credit exposure (gross positive mark to market value of the contract)

b)    Potential future credit exposure which is a product of the notional principal amount across the outstanding contract and a factor that is based on the mandated credit conversion factors as prescribed under the IRDAI circular on Interest Rate Derivatives, which is applied on the residual maturity of the contract.

3.28. Valuation of Investment property

In accordance with the IRDAI (Actuarial, Finance and Investment Functions of Insurers) Regulations, 2024, Schedule II Part I clause 7(1), the Company's investment property has been revalued. The Company has revalued all its investment properties held for more than one year and market value for such properties is based on valuation performed by an independent valuer at March 31, 2025. The opinion on market value by the independent valuer, is prepared in accordance with the “The RICS Valuation Standards” published by the Royal Institution of Chartered Surveyors ("RICS"), subject to variation to meet local established law, custom, practice and market conditions. The methods used in valuation of property includes “Direct comparable approach”. The real estate investment property is accordingly valued at ' 50,365 lakhs at March 31, 2025 (March 31, 2024: ' 49,830 lakhs). The historical cost of the property at March 31, 2025 is ' 41,914 lakhs (March 31, 2024: ' 41,914 lakhs).

3.29. Impairment of investment assets

In accordance with the IRDAI (Actuarial, Finance and Investment Functions of Insurers) Regulations, 2024, Schedule II Part I on “Accounting Principle for Preparation of Financial Statements” on procedure to determine the value of investment, the impairment in value of investments other than temporary diminution has been assessed as at March 31, 2025 and accordingly impairment provisions/(reversal) have been provided as below.

Listed Equity Shares and Unlisted Equity Shares

In case of Listed Equity Shares, a provision/(reversal) for impairment loss has been recognized in Revenue Account and Profit and Loss Account under the head “Provision for diminution in the value of investments”. Policyholders' and Shareholders' Fair Value Change Account under Policyholders' and Shareholders' Funds respectively in the Balance Sheet have been adjusted for such provision/(reversal) of impairment loss. The details of impairment for the year are given below:

3.30. Encumbrances of assets

The assets of the Company are free from all encumbrances except to the extent assets or monies are required to be deposited as margin contributions for investment trade obligations of the Company for specific services or as mandated by the court, as detailed below:

Terms of pledge: Physical custody of the securities is maintained with the CCIL. However, interest accrued on these securities is received by the Company. The Company is entitled to receive interest income on the money deposited under default fund segment and securities segment with the CCIL which is actual cash contributions utilised towards margin requirement, less the minimum threshold prescribed by CCIL. These deposits, both securities and cash, can be invoked by CCIL in case of any default by the Company in settlement of trades in Securities and TREPS.

3.31. Assets to be deposited under local laws

There are no assets required to be deposited by the Company under any local laws or otherwise encumbered in or outside India at March 31, 2025 (March 31, 2024: ' Nil) except the assets disclosed in the note 3.30.

3.32.    Securities Lending and Borrowing Scheme (SLB)

Equity shares transferred under SLB continue to be recognised on the Balance Sheet as the Company retains all the associated risks and rewards of these securities.

The value of equity shares lent by the Company under SLB and outstanding at March 31, 2025 is ' Nil (March 31, 2024: ' Nil).

3.33.    Reverse Repo transactions in Government securities/Corporate Debt Securities

Disclosures pursuant to IRDAI Master Circular on Actuarial, Finance and Investment Functions of Insurers:

There is no investment in reverse repo for the year ended March 31, 2025 (March 31, 2024: ' Nil).

3.39. Sector-wise percentage of business

The IRDAI (Rural, Social Sector and Motor Third Party Obligations) Regulations, 2024, as notified by the IRDAI with effect from April 1, 2024, provides for the rural and social sector obligations as under:

Rural sector obligations for FY2025 - 25,000 Gram Panchayats (GPs), to be cumulatively covered by Life insurers with minimum obligation of 10% lives in a GP. For this purpose, the Life Insurance Council has divided 25,000 GPs amongst all the Life insurers and accordingly 1,196 GPs were allocated to the Company spread over Bihar, Tamil Nadu, Uttar Pradesh and Karnataka.

3.43.    Extra allocation

As per the product filing for Group Unit Linked Superannuation and Group Unit Linked Employee Benefit Plan, extra allocation of units made and total extra allocation recovered is disclosed as below.

Total extra allocation made with respect to group products (Group Unit Linked Superannuation and Group Unit Linked Employee Benefit Plan) for the year ended March 31, 2025 is ' Nil (for year ended March 31, 2024: ' 14 lakhs).

The amount of recovery towards extra allocation for the year ended March 31, 2025 is ' 5 lakhs (March 31, 2024: ' 24 lakhs).

3.44.    Dividend

Final dividend proposed for year ended March 31, 2025 is ' 0.85 per equity share (March 31, 2024: ' 0.60 per equity share) of ' 10 each in its board meeting held on April 15, 2025, subject to shareholder approval in annual general meeting.

Unclaimed dividend of ' 32 lakhs at March 31, 2025 (March 31, 2024: ' 63 lakhs) represents dividend paid but not claimed by shareholders, and are represented by a bank balance of an equivalent amount.

3.48.    Long term contracts

The Company has a process whereby periodically all long term contracts are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provision as required under any law / accounting standards for material foreseeable losses on such long term contracts including derivative contracts has been made in the standalone financial statements.

For insurance contracts, actuarial valuation of liabilities for policies is done by the Appointed Actuary of the Company. The methods and assumptions used in valuation of liabilities are in accordance with the regulations issued by the Insurance Regulatory and Development Authority of India ('IRDAI') and actuarial practice standards and guidance notes issued by the Institute of Actuaries of India.

3.49.    Corporate Social Responsibility

The Company's CSR obligation has been determined as per Section 135(5) of the Companies Act, 2013, which mandates a minimum contribution of 2% of the average net profits of the company for the three immediately preceding financial years. Accordingly, the CSR obligation for FY2025 is calculated based on the net profits reported for FY2022, FY2023 and FY2024.

Further, as per the Companies (Corporate Social Responsibility Policy) Rules, 2014, such net profit for the calculation of CSR obligation shall not include any dividend received from other companies in India which are covered under and complying with the provisions of Section 135 of the Act.

Accordingly, net profit of the Company to be considered for CSR calculation for FY2025 is NIL after adjusting for dividend income received from companies adhering to Section 135 of the Companies Act. However, the Company has voluntarily chosen to contribute ' 251 lakhs towards CSR initiatives for FY2025 as approved and ratified by the Board.

In accordance with the Technical Guide on Accounting for Expenditure on Corporate Social Responsibility Activities (Revised) issued by ICAI in January 2025, closing balance for year ending March 31, 2025 of ' 251 lakhs has been recognised as Prepaid expenses.

3.50.    Loans and advances to subsidiaries, associates and related entities

Pursuant to Securities and Exchange Board of India (Listing obligations and disclosure requirements) Regulations, 2015, disclosures pertaining to loans and advances given to subsidiaries, associates and related entities are given below:

There are no loans and advances given to subsidiaries, associates and firms/companies in which directors are interested except for advances which are in the normal course of business but not in the nature of loans (March 31, 2024: Nil)

There are no investments by the loanee in the shares of the Company.

3.51.    Contribution/transfer to Policyholders’ account

Amounts contributed to policyholders' account towards excess of expense of management and towards remuneration of MD/CEO/WTD/Other KMPs in excess of prescribed limits are disclosed separately in the Profit and Loss account & the Revenue Account. Further, amounts have been transferred from shareholder's account for funding deficit in the Revenue Account.

In accordance with the Insurance Regulatory and Development Authority of India (Expenses of Management, including Commission, of Insurers) Regulations, 2024 expense of management in excess of allowable limit in Participating and Non Participating (including linked) business segment is required to be borne by the Shareholders' and separately disclosed in the Profit and Loss account & the Revenue Account. The Company is in compliance with the expense of management regulation for Participating and Non Participating (including linked) business segment and also at an overall level during the year ended March 31, 2025.

The contribution of ' 31,370 lakhs (March 31, 2024: ' 179,264) made by the shareholders' to the policyholders' account towards deficit funding in various line of business.

No irreversible contribution has been made from the Shareholders' account to the Policyholders' account during the financial year ended March 31, 2025 (March 31, 2024: Nil).

3.52. Ind AS Implementation

The Ministry of Corporate Affairs (MCA) on September 28, 2024 has notified Ind AS 117: Insurance Contracts effective from April 1, 2024.

During FY2024, the Company received communication from IRDAI regarding the phased implementation of Ind AS in the insurance sector and the Company has been identified under phase 1 Insurer category to implement Ind AS from April 1, 2025. Subsequently, during FY2025, the Company received communication from IRDAI wherein the Ind AS implementation date has been deferred to April 1, 2027.

Pursuant to IRDAI letter 100/2/Ind AS- Mission Mode/2022-23/1 dated July 14, 2022 and letter 100/2/Ind AS- Mission Mode/2024 Vol-2 dated January 10, 2025, a disclosure on the strategy for Ind AS implementation and progress in this regard is given below:

The Company has formed steering committee consisting of members from Actuarial, Finance and Technology teams for Ind AS implementation and the Board of Directors and the Board Audit Committee has been updated on the progress of Ind As implementation quarterly.

The Company has implemented IFRS 17 as part of consolidation for its foreign promotor and expects to leverage the same for Ind AS implementation as mandated by IRDAI.

3.53.    Loans, Advances & Investment by or on behalf of Ultimate Beneficiaries

a)    The Company has not advanced or loaned or invested (either from borrowed funds or share premium or any other sources or other kind of funds) to or in any other person or entity, including foreign entity (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and

b)    The Company has not received any funds (which are material either individually or in the aggregate) from any person or entity, including foreign entity (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

3.54.    Expenses allocation/apportionment methodology

During the FY2025, the company reviewed the allocation methodology of its expenses under Expenses of Management policy and accordingly made changes to the method of allocation of expenses pertaining to corporate functions . This change in the allocation method has resulted in a reduction of policy liabilities by ' 46,334 lakhs as of March 31, 2025.